GURU Organic Energy Announces Fourth Quarter and Fiscal 2021 Financial Results

Fiscal 2021 Highlights

• Record net revenues of $30.2 million, or a 37% increase over 2020, marking an 8^th consecutive year of record growth
• Gross margin of 59% versus 64% in 2020, reflecting new game-changing distribution agreement and business model with PepsiCo^® Canada Beverages (“PepsiCo”) and increased marketing activities
• Strong financial position with cash and unused credit facilities of over $75 million

Q4 2021 Highlights

• Record net revenues of $8.5 million, up 38% versus Q4 2020
• Launch of exclusive national distribution agreement with PepsiCo^® on October 4, 2021, delivering significant distribution gains subsequent to Q4 in Western Canada and Ontario, reaching over 85% of weighted distribution in the convenience and gas (C&G) channel in December 2021¹
• Ramp up of brand marketing activities across Canada has nearly doubled GURU’s brand awareness in the rest of Canada from Q1 to Q4 2021, driven by strong growth in its key consumer target segment to 32%, up from 15%²
• Subsequent to Q4, marketing launch of GURU Guayusa Tropical Punch in Quebec, generating market share of 3.5%³ and making the Top 10 selling SKUs³ over a 4-week period in December 2021, a record among all 2021 industry innovations³
• Subsequent to Q4, increased estimated points of sale to over 23,700, mainly from C&G channel in Canada, with a potential to further increase as Canadian and U.S. Grocery, Drug, and Mass (GDM) retailers confirm listings in the spring

MONTREAL, Jan. 20, 2022 (GLOBE NEWSWIRE) -- GURU Organic Energy Corp. (TSX: GURU) (“GURU” or the “Company”), Canada’s leading organic energy drink brand, is pleased to announce its results for the fourth quarter and year ended October 31, 2021. All amounts are in Canadian dollars unless otherwise indicated.

“2021 was a remarkable year for GURU and I am proud of what we have achieved since going public and launching the next phase of our Company’s growth ambitions. We generated strong net revenue growth of 37%; increased our points of sale by 59% to over 23,700 subsequent to fiscal year-end; raised additional capital; signed a game-changing distribution agreement with PepsiCo^® in Canada and invested in our brand. We rolled out new product innovations and, late in the year, began to deploy what will be a sustained marketing effort and investment in our brand in key markets to drive awareness and trial to support our expanded product distribution,” said Carl Goyette, President and CEO of GURU.

Mr. Goyette added, “With all that has been accomplished in 2021 and with our clear focus on driving brand awareness and trial in 2022, we are now better positioned than ever to compete on a national scale as the energy drink market disrupter, with the means to invest in our progressive and differentiated brand for the first time in our history. While these investments will impact profitability in the near term, they are key in enabling us to establish and scale the GURU brand beyond the Quebec market and across Canada, as we aim to increase our market share to sustain profitable growth in the longer term.”

“With our new operating model in Canada now in place, we can allocate more resources to the vast and growing U.S. energy drink market, which performed well in Q4 of 2021. We are actively working on increasing our product listings and continue to make meaningful headway. In the U.S. market, we will continue to invest methodically in the most profitable channels from a national perspective as well as through online sales, while also focusing on increasing our sales velocity in California in the near term, where consumers continue to respond favourably to our good energy and authentic brand positioning,” concluded Mr. Goyette.

A New Natural Innovation: GURU Guayusa Tropical Punch
GURU’s latest product innovation, GURU Guayusa Tropical Punch, became available in most Quebec convenience and grocery stores beginning on October 4, 2021, and was formally launched subsequent to quarter end in early November 2021 with a targeted marketing campaign. Guayusa Tropical Punch recorded the best ever performance at launch for a new innovation in the energy drink industry in 2021, generating a 3.5% market share³ and making the top 10 selling SKUs³ in the province of Quebec over a 4-week period ending December 4, 2021. Guayusa Tropical Punch will become available in other Canadian provinces in the spring of 2022.

Made with Guayusa, a superleaf with natural energy-boosting and antioxidant properties, and combined with the rich flavours of passion fruit, guava, jack fruit and a refreshing hint of clementine, GURU Guayusa Tropical Punch has a great taste and creates a smooth, balanced and sustained alertness with no peak and no crash. Made with a new blend of natural sweeteners, there are only 50 calories per can, which is three times fewer calories and sugar than the competition.

Results of operations
Net revenue in the fourth quarter increased by 38% to $8.5 million, compared to $6.1 million for the same period a year ago. The increase is due to sales growth in Canada, as a result of velocity growth and increased points of sale. Sales in Canada grew by 39%, as a result of higher volume in Quebec and high triple digit growth in Ontario, Western and Atlantic Canada, mainly due to an initial large order from PepsiCo^® in Q4 2021, partially offset by distributor returns as a result of the exclusive Canadian distribution agreement with PepsiCo^®. U.S. sales grew by 43% in U.S. dollars, or 37% in Canadian dollars, during Q4 2021, compared to the same period last year. According to SPINS⁵, which measures U.S. retail sales of GURU energy drinks, GURU experienced 32% growth nationally in Q4 2021 versus Q4 2020, and 42% growth in California for the same period. For the twelve-month period, net revenue increased by 37% to $30.2 million, up from $22.1 million for the same period in 2020.

Gross profit totalled $4.3 million in the fourth quarter, an increase of 16% compared to $3.7 million last year. Gross margin was 51%, compared to 61% for the same period a year ago. The decrease in gross margin was mainly due to a change in the Company’s business model for the Canadian market during Q4 2021 as a result of the PepsiCo^® Canadian agreement, which became effective on October 4, 2021, and comprises distribution, selling and merchandizing fees (a portion of which was previously categorized as SG&A expenses) and a one-time set-up cost with PepsiCo^®. The lower gross margin was also impacted by increased promotional activities and higher product costs driven by higher input and transportation costs since the onset of the COVID-19 pandemic. For the twelve-month period, gross profit totalled $17.9 million, 27% higher than gross profit of $14.0 million a year ago. Gross margin for the period was 59%, compared to 64% last year.

Selling, general and administrative expenses (“SG&A”), which include operational, sales, marketing, and administration costs, amounted to $10.3 million in the fourth quarter, compared to SG&A of $4.2 million for the same period a year ago. Selling and marketing expenses accounted for $5.4 million of the increase in SG&A as the Company invested in several targeted marketing campaigns during the quarter, notably, the Back-to-University media campaign in Western Canada and Ontario, the out-of-home and digital campaign, the launch of the fall Quebec marketing campaign with ‘Occupation Double’, which was more extensive in fiscal 2021 than in 2020, as well as continued field and trade marketing investments in the rest of Canada. For the twelve-month period, SG&A amounted to $27.8 million, compared to $13.0 million for the same period a year ago. Most of the increase is due to investments in sales and marketing activities including the launch of marketing campaigns in Western Canada and Ontario, field and marketing activities throughout Canada, expansion plan set-up costs, and set-up costs incurred for the PepsiCo^® Canadian distribution agreement.

Adjusted EBITDA⁴ amounted to $(5.7) million compared to $(0.4) million last year. The decrease in adjusted EBITDA was due to higher SG&A, partially offset by the increase in gross profit. Adjusted EBITDA for the twelve-month period was $(8.7) million in 2021 compared to earnings of $1.4 million in 2020.

Net loss for the fourth quarter totalled $6.0 million or $(0.18) per share (basic and diluted), compared to a net loss of $3.1 million or $(0.11) per share (basic and diluted) for the same period a year ago. The majority of the increase in the net loss reflects the additional costs associated with field and trade marketing launch activities in Ontario, Western and Atlantic Canada, public company costs, and other set-up costs for our expansion plans. Net loss for the twelve-month period totalled $9.8 million in 2021, or $(0.33) per share (basic and diluted), compared to a net loss of $2.2 million or $(0.10) per share (basic and diluted) for the same period a year ago.

As of October 31, 2021, the Company had cash and cash equivalents of $67.0 million and unused $CA and $US denominated credit facilities totalling $10 million.

¹ Nielsen: 4-week period ending December 4, 2021. Convenience & Gas (C&G), Western Canada and Ontario vs. same period year ago.
² Market research report by element54 and Patterson Langlois for GURU with 1,798 participants in the rest of Canada.
³ Nielsen: 4-week period ending December 4, 2021. Convenience & Gas (C&G), Quebec vs. same period year ago.
⁴ Please refer to the “Non-GAAP financial measure” section for additional information on reconciliation of net loss to adjusted EBITDA at the end of this release.
⁵ SPINS IRI data, Total Multi-Outlet (MULO) and Natural channels, period ending October 31, 2021.

Conference call
GURU will hold a conference call to discuss its fourth quarter and 2021 fiscal year results today, January 20, 2022, at 10:00 a.m. ET. Interested parties can listen in by accessing the live audio webcast at https://investors.guruenergy.com/en/ir-corner or by dialling 833-678-0822 (North America) or 602-563-8278 (International). Participants will need to provide the following Conference ID Number: 5596675. A webcast replay will be available on GURU’s website until January 20, 2023.

About GURU Products
All GURU energy drinks are plant-based, high in natural caffeine, free of artificial sweeteners, artificial colours and flavours, and have no preservatives. In addition, all drinks are organic, vegan and gluten free – and the best thing is their amazing taste.

About GURU
GURU Organic Energy Corp. (TSX: GURU) is a dynamic, fast-growing beverage company launched in 1999, when it pioneered the world’s first natural, plant-based energy drink. The Company markets organic energy drinks in Canada and the United States through an estimated distribution network of more than 23,700 points of sale, and through guruenergy.com and Amazon. GURU has built an inspiring brand with a clean list of organic plant-based ingredients. Its drinks offer consumers good energy that never comes at the expense of their health. The Company is committed to achieving its mission of cleaning the energy drink industry in Canada and the United States. For more information, go to www.guruenergy.com or follow us @guruenergydrink on Instagram and @guruenergy on Facebook.

Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. Such forward-looking statements include, but are not limited to, information with respect to our objectives and the strategies for achieving those objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. Forward-looking statements are typically identified by the use of words such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, or “continue”, although not all forward-looking statements contain these words. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company and its business, operations, prospects, and risks at a point in time in the context of historical and possible future developments, and the reader is therefore cautioned that such information may not be appropriate for other purposes. Forward-looking statements are based on assumptions and are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. Those risks and uncertainties include the following, which are discussed in greater detail under “Risk Factors” in the Company’s Annual Information Form for the year ended October 31, 2021, available on SEDAR at www.sedar.com: management of growth; reliance on key personnel; changes in consumer preferences; significant changes in government regulation; criticism of energy drink products and/or the energy drink market; economic downturn and continued uncertainty in the financial markets and other adverse changes in general economic or political conditions, as well as the COVID-19 pandemic or other major macroeconomic phenomena; global or regional catastrophic events; fluctuations in foreign currency exchange rates; net revenues derived entirely from energy drinks; increased competition; relationships with co-packers and distributors and/or their ability to manufacture and/or distribute GURU’s products; relationships with existing customers; changing retail landscape; increases in costs and/or shortages of raw materials and/or ingredients and/or fuel and/or costs of co-packing; failure to accurately estimate demand for its products; history of negative cash flow and no assurance of continued profitability or positive EBITDA; intellectual property rights; maintenance of brand image or product quality; retention of the full-time services of senior management; climate change; litigation; information technology systems; fluctuation of quarterly operating results; risks associated with the PepsiCo distribution agreement; no assurance of continued profitability or positive EBITDA; and conflicts of interest. Certain assumptions were made in preparing the forward-looking statements concerning availability of capital resources, business performance, market conditions and consumer demand. Consequently, all of the forward-looking statements contained herein are qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition, or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking statements contained herein are provided as of the date hereof, and we do not undertake to update or amend such forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Non-GAAP Financial Measure

Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as net income or loss before national Canadian distribution agreement set-up costs, reverse acquisition of Mira X expenses, income taxes, net financial expenses, depreciation and amortization, and stock-based compensation expense. The exclusion of national Canadian distribution agreement set-up costs eliminates the impact on earnings of costs that are not expected to re-occur in the near term. The exclusion of net finance expense eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, and share-based compensation eliminates the non-cash impact of these items. We believe that adjusted EBITDA is a useful measure of financial performance without the variation caused by the impacts of the items described above because it provides an indication of the Company’s ability to seize growth opportunities in a cost-effective manner, finance its ongoing operations and service its long-term debt. Excluding these items does not imply that they are necessarily non-recurring. Management believes this non-GAAP financial measure, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and future prospects in a manner similar to management. Although Adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, it has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under IFRS. This non-GAAP financial measure is not an earnings or cash flow measure recognized by International Financial Reporting Standards (IFRS) and does not have a standardized meaning prescribed by IFRS. Our method of calculating this financial measure may differ from the methods used by other issuers and, accordingly, our definition of this non-GAAP financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-GAAP financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.

Reconciliation of Net Loss to Adjusted EBITDA

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